Got Health? Not for Long, If Hedge Funds Get Their Way
If you are currently taking a prescription drug, or if you expect to someday be a patient in need of medical care, then you should be wary of a new hedge fund strategy that threatens to upend some of America’s most promising biopharmaceutical companies. Hedge funds are circling the pharmaceutical industry like sharks, challenging their patents while also betting against their shares, in order to make obscene profits at the industry’s expense.
The hedge funds in question claim that this profiteering strategy will help lower the cost of medicine for patients by clearing the way for generic alternatives, but their real motivation is the millions – or billions – of dollars they stand to make by shorting biopharmaceutical stocks.
The new strategy exploits an administrative process known as Inter Partes Review, or IPR, that allows petitions to strike down patents to be heard by a patent office panel. Congress conceived of IPR in 2011 as a way to fast-track patent challenges and curtail patent trolls, but hedge funds are using the IPR process to imperil biopharmaceutical companies for profit.
The problem with this strategy is that it benefits the few at the expense of the many. When America’s biopharmaceutical industry falls under attack, patients suffer the consequences. The biopharmaceutical industry has invested more than $500 billion in research and development (R&D) since 2000. But if these pioneering companies are bankrupted by hedge funds, or if they are made to fear that their patents are not safe from opportunistic invalidation, they will discontinue the discovery that gives hope and health to millions of sick patients each year.
Another group that the new strategy will harm is workers. The biopharmaceutical industry supports millions of jobs in the U.S. alone, and if companies are forced to shut down, the families who rely on the industry for employment will be left with no prospects and our economy will weaken.
Among the most disconcerting aspects of the new patent challenge strategy is the fact that it threatens to extinguish the flame of American ingenuity. The future of medicine is exciting – personalized medicine promises new treatment options that will be more effective than anything that’s currently on the market. But in order to realize the full potential that’s on our health care horizon, we need to maintain strong patent protection that incentivizes the industry to keep discovering new and better ways to fight disease.
Here’s what it comes down to: a year from now, or a decade or two from now, when you get a serious diagnosis that threatens your life, you will want to know there’s hope. Hope might take the form of a tiny pill that allows you to live a longer, healthier life. Hope might take the form of innovative personalized treatments that are designed to provide you with the best possible outcome. But hope cannot exist if we attack the very industry that creates these medicines and forges a brighter future for all of us. We will all be patients someday, and we owe it to ourselves to help America’s biopharmaceutical industry stay strong.
Learn more about the issue:
- Analysis of inter partes review and post-grant review in the life sciences industry through first quarter 2015
- Hayman Capital Bearish On Pharma, But Not All Pharma
- Hillary Clinton Takes Another Swipe At Hedge Fund Managers
- Protect patents for biotech companies
